For many people, there is an ever-growing number of things to worry about, and things you want to protect. Insurance policies on things like your home, your car and your health are a good way to limit some of the risks you face. If you get into an accident, come down with an illness or have your home damaged by a natural disaster, an insurance policy can allow you to avoid most of the costs associated with those types of events.
However, and as you may already know, insurance companies do not always immediately pay out on your policy as soon as you file a claim. Insurance companies will sometimes delay, or insist on unreasonable amounts of information, or may even unfairly deny your claim. This gives rise to a dispute between you and the insurance company. If this happens, there are some things you may want to know.
First, there are a number of laws aimed at protecting insurance policy holders (the insured,) that limit what an insurance company can and cannot do. Most of them can be found in the California Insurance Code. Second, insurance companies owe what is called a fiduciary duty to their insured, which requires them to act in good faith and with the goal of serving the interests of their insured. Third, there is the California Department of Insurance, whose job it is to regulate insurance companies and protect insurance policy holders Finally, if a dispute between you and your insurance company does arise, you may need the assistance of an experienced attorney to advocate on your behalf in order to maximize the possibility of your dispute being resolved favorably.
California Department of Insurance:
The California Department of Insurance is run by the Insurance Commissioner for the State of California, and their staff. This is an elected office that runs for a four-year term. They have the authority to regulate and enforce California laws against insurance companies, insurance brokers, insurance agents and insurance adjustors doing business in California
It is the job of the Insurance Commissioner to ensure that insurance companies keep the promises they make when they issue an insurance policy, and that they live up to their obligations. They do this by, among other things, making sure that insurance companies have enough money to pay claims, and are limited in the ways that they can avoid paying claims through application of the laws designed to protect policy holders.
However, the California Department of Insurance is somewhat limited in the types of assistance it can offer to individual policy holders, as their primary function is that of a regulatory body. In a situation where you believe that your insurance company is not treating you fairly, or has sold you a policy that does not offer any substantial protection, you may need to hire an attorney and bring suit against them to resolve the dispute.
The most common form of insurance dispute is what is called "insurance bad faith." In essence this is a claim that your insurance company is treating your unfairly, and is acting in "bad faith." This will usually involve a refusal to pay out on a policy, or an attempt to pay out on a policy in an amount that is too low; but there are any number of ways that an insurance company can act in bad faith.
In order to understand what it means to be acting in bad faith, you need to know what it means to be acting in good faith. Good faith and bad faith are terms that are widely used in the legal profession, but are often poorly defined. You could ask three different attorneys to define these terms, and get three different answers.
There are, however, some court cases in California that give some insight into what is meant by the terms "good faith" and "bad faith." One such case is Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94. This case stands for the idea that bad faith is the opposite of good faith, and that bad faith must be proven by a substantial show of evidence; in other words a court will not assume bad faith on the part of an insurance company, the policy holder must prove it. Another case, Pugh v. See's Candies, Inc. (1988) 203 Cal.App.3d 743, tells us that bad faith is more that simply bad judgment or simple carelessness; and must involve something more sinister, like an intent to commit fraud, intentionally mislead or deceive a policy holder, or outright refusal to comply with their established contractual obligations.
The takeaway from this is that insurance companies have an obligation to treat you fairly and work to serve your best interests. If they fail to do that, and is seems as though they are intentionally mistreating you in order to serve their own interests; you may have a claim for insurance bad faith. In that case, an experienced attorney can help you resolve your dispute, and get what you are entitled to as a policy holder.
Examples of Typical Insurance Disputes:
- The insurance company refuses to, or fails to disclose important provisions, such as exclusions, in an insurance policy company. For example, if you live in an area that is at risk of wildfires, and you buy a homeowners policy specifically to mitigate that risk; the insurance company needs to disclose if damage from wildfires is excluded from the policy;
- The insurance company fails to conduct an adequate investigation, or fails to advocate for you. Let's say you are involved in an auto accident, and the insurance company for the other driver claims that you are at fault. Your insurance company cannot just take the other insurance company at their word. They must conduct their own investigation, and take your side if the results of their investigation allow them to do so;
- After a claim is filed, the insurance company intentionally misrepresents what is covered by the insurance policy in hopes that the policy holder does not know any better, and will accept a lower payout as a result.
- The insurance company unreasonably delays its efforts to investigate a claim, or to pay it out.
This is only a very short sample of the types of ways that an insurance company can act in bad faith, or otherwise act in a way that gives rise to an insurance dispute. If in filing an insurance claim, you feel as though the insurance company is not treating you fairly, or is trying to avoid having to pay out on your claim, you may want to consider hiring an attorney to represent your interests in order to force the insurance company to do the same.
If you feel you have been wrongfully denied on a claim or just strung along for too long, we can help. Our firm specializes in bad faith insurance denials, when an insurance company wrongfully denies or refuses to pay out on a claim. We have recently settled a handful of bad faith cases totaling around half a million dollars.